FIDELITY SOUTHERN CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - FIDELITY SOUTHERN CORP	lionqe630168k-earnings.htm

FOR IMMEDIATE RELEASE

Contacts: Martha Fleming, Steve Brolly

Fidelity Southern Corporation (404) 240-1504

FIDELITY SOUTHERN CORPORATION EARNS $6.6 MILLION

IN SECOND QUARTER

ATLANTA, GA (July 21, 2016) – Fidelity Southern Corporation (“Fidelity” or the “Company”) (NASDAQ: LION), holding company for Fidelity Bank (the “Bank”), today reported net income of $6.6 million and $11.2 million for the quarter and six months ended June 30, 2016, respectively. Earnings per diluted share was $0.26 and $0.44 for the quarter and six months ended June 30, 2016, respectively.

KEY QUARTERLY RESULTS


•	EPS was impacted by $0.21 per share due to the non-cash mortgage servicing rights (MSR) impairment


•	Return on average assets (ROAA) was 0.64%; excluding the impact of the MSR impairment, ROAA was 1.17%


•	Return on average equity (ROAE) was 8.07%; excluding the impact of the MSR impairment, ROAE was 14.84%


•	Total revenue increased by $7.6 million, or 12.8%, to $66.8 million


•	Total assets increased by $180.4 million, or 4.4%, to $4.3 billion


•	Loan portfolio increased by $160.2 million, or 4.6%, to $3.6 billion


•	Loans serviced for others grew by $362.6 million, or 4.3%, to $8.7 billion


•	Total deposits increased by $148.2 million, or 4.3%, to $3.6 billion


•	Net interest margin increased by 6 basis points to 3.31%

Fidelity's Chairman, Jim Miller, said, “Despite swimming upstream in the interest rate world, earnings reached $6.6 million in the quarter. The impairment to our mortgage servicing rights grew to over $22 million which makes the strong growth of the company all the more impressive. All facets of the company grew including production, deposits, revenue, and loans portfolioed and serviced.

“The branches and people recently added are already contributing to the bottom line. To keep up with our growth and to serve customers as they wish to be served we have spent heavily on training, software and equipment and will be a much more efficient and user friendly bank soon. Our strategy of branching opportunistically, with our emphasis on continuing to build out Atlanta, Jacksonville, Orlando, and Bradenton-Sarasota, is still in place. Both Macon and Savannah also remain targets.

“All of this said, we have become more cautious because of interest rate risk and because of the significant valuation distortions caused by government interest rate and fiscal policy. We will stay disciplined to our focus on consumer and business banking and not on real estate.”

BALANCE SHEET

Total assets grew to $4.3 billion at June 30, 2016, an increase of $180.4 million, or 4.4%, compared to March 31, 2016 and $907.0 million, or 26.9%, compared to June 30, 2015, respectively. The year over year increase was primarily attributable to assets added through acquisition of $641.3 million, as well as organic loan growth.

On March 1, 2016, the Company acquired American Enterprise Bankshares, Inc. (“AEB”), the holding company for American Enterprise Bank of Florida, a Jacksonville, Florida-based community bank. AEB merged with and into the Company and American Enterprise Bank of Florida merged with and into Fidelity Bank. With this acquisition, the Company added approximately $208.8 million in assets, including $147.4 million in loans, and $181.8 million in deposits and two branches. The Company projects cost savings will be recognized in future periods once the conversion and integration activities related to the acquisition are completed.

In addition to the AEB acquisition, since June 30. 2015, the Company added $280.8 million in assets, including $144.8 million in loans and $266.4 million in deposits and seven branches in October 2015 from The Bank of Georgia FDIC-assisted acquisition and $151.7 million in assets, including $29.7 million in loans and $151.1 million in deposits, in the acquisition of eight branches from First Bank in September 2015.

Loans

Total loans held for investment grew to $3.2 billion at June 30, 2016, an increase of $98.1 million and $779.6 million, or 3.2% and 32.3%, during the quarter and year over year, respectively. The year over year increase is comprised of organic growth of $457.8 million and $321.8 million in loans added through acquisitions, with the majority of the increase in acquired loans coming from the acquisition of $200.6 million in commercial loans. The Bank continues to generate new business and leverage its expansion through acquisitions.

The majority of the increase in the portfolio during the quarter occurred in the consumer loan portfolio, including indirect automobile and installment loans, which grew by $57.4 million and $265.3 million, or 3.8% and 20.5%, during the quarter and year over year, respectively. Year over year, $257.5 million of the increase was related to organic growth, mainly in the indirect automobile portfolio as a result of strong auto loan production. In addition, $7.8 million in consumer loans were added as the result of acquisitions.

Construction loans grew by $17.5 million and $70.8 million, or 8.7% and 48.2%, during the quarter and year over year, respectively, as the market for builder loans continues to improve and the customer base has expanded in both Georgia and Florida. Mortgage loans, including first mortgages and home equity lines of credit, increased by $16.2 million and $174.8 million, or 3.5% and 58.7%, for the quarter and year over year, respectively. Year over year, $75.7 million in mortgage loans were added from acquisitions. The primary driver of organic loan growth in the mortgage portfolio has been the Bank's increased focus on portfolio lending as staff have been added and sales efforts have increased on products to grow the mortgage portfolio.

Loan Servicing Rights

Although gross servicing rights have continued to increase with strong residential mortgage, SBA and indirect auto loan sales, net servicing rights decreased during the quarter by $4.1 million, or 4.9%, as MSR impairment charges recorded in the last two quarters have been much larger than usual. The Bank recorded $8.6 million and $13.2 million in MSR impairment during the quarter and six months ended June 30, 2016, respectively, an increase of $11.2 million and $13.4 million, as compared to the same periods in 2015. The increase in impairment is primarily related to an increase in estimated future prepayment speeds, and subsequently a decrease in the estimated remaining life of the servicing income, of the underlying loans serviced for others, due to the decrease in market interest rates.

Deposits

Total deposits at June 30, 2016, of $3.6 billion increased by $148.2 million and $930.4 million, or 4.3% and 35.3%, during the quarter and year over year, respectively. The year over year increase was primarily the result of $599.3 million in deposits added through acquisitions in addition to organic deposit growth.

The majority of the increase in deposits occurred in noninterest bearing demand deposits which grew to $995.7 million at June 30, 2016, an increase of $110.4 million and $349.3 million, or 12.5% and 54.0%, during the quarter and year over year, respectively. For the quarter, the majority of the increase occurred due to increased volume in commercial business accounts. Year over year, $200.1 million of the increase was related to organic growth, with $149.2 million added as the result of acquisitions. During 2016, the Bank continued its deposit marketing program, increasing the number of demand deposit accounts.

Money market and interest-bearing demand deposits grew by $24.0 million and $303.7 million, or 2.1% and 35.7%, during the quarter and year over year, respectively. Year over year, $100.8 million of the increase was related to organic growth, with $202.9 million added as the result of acquisitions.

Average core deposits, including noninterest-bearing demand deposits, grew by $220.7 million and $655.6 million, or 10.0% and 37.2%, during the quarter and year over year, respectively, particularly in commercial accounts and through the acquisition of branch deposits, year over year.

Borrowings

Short-term borrowings increased by $26.6 million, or 14.0%, during the quarter, and decreased by $87.7 million, or 28.9%, year over year, as a result of fluctuations in short-term liquidity needs which the Bank manages through short-term FHLB advances and Fed funds purchased.

INCOME STATEMENT

Interest Income

Interest income was $36.8 million and $71.1 million for the quarter and the six months ended June 30, 2016, an increase of $9.3 million and $17.1 million, or 33.8% and 31.7%, respectively, as compared to the same periods in 2015. Year over year, the increase in average loans for the quarter and six months was $812.8 million and $764.8 million, or 29.3% and 28.1%, respectively, which was the primary reason for the increase in interest income.

The yield on loans increased by 13 and 9 basis points for the quarter and six months, respectively. Excluding the accretable discount, the yield on loans was flat for the quarter as higher yields on acquired loans, mainly in the AEB acquisition, offset lower yields on new loans originated over the previous twelve months. For the six months, the yield on loans excluding the accretable discount decreased by 6 basis points as the higher yields on performing loans added in the AEB acquisition only contributed to four of the six months in 2016 since the AEB acquisition closed on March 1, 2016 and did not fully offset the lower yields on new loans originated.

On a linked-quarter basis, interest income increased by $2.5 million, or 3 basis points, primarily due to the increase in average loans during the quarter of $220.3 million, or 6.5%. Excluding the accretable discount, the yield on loans increased by 6 basis points, led by an aggregate $1.5 million higher interest income from commercial and construction loans, mainly due to higher yields on performing loans added from the AEB acquisition.

Interest Expense

Interest expense was $5.0 million and $10.0 million for the quarter and six months ended June 30, 2016, an increase of $1.5 million and $3.5 million, or 41.7% and 54.5%, respectively, as compared to the same periods in 2015, primarily due to the issuance of $75.0 million in subordinated debt in May of 2015. The subordinated debt bears interest at a fixed rate of 5.875%, which resulted in an additional $735,000 and $1.8 million in expense

for the quarter and six months ended June 30, 2016, respectively, as compared to the same periods in the prior year. This increase was partially offset by lower funding costs on interest-bearing deposits as maturing time deposits have repriced at lower rates compared to the prior year.

The majority of the remaining increases in interest expense for the quarter and six months occurred due to the year over year increase of $627.7 million, or 32.3%, in interest-bearing deposits.

On a linked-quarter basis, interest expense was flat, decreasing by $35,000, or 0.7%.

Net Interest Margin

The net interest margin was 3.31% and 3.29% for the quarter and six months ended June 30, 2016, compared to 3.25% and 3.31% for the same periods in 2015, respectively. The increase of 6 basis points for the quarter resulted from an increase of 11 basis points in the yield on earning assets, partially offset by the 7 basis point increase in cost of funds, due to the $75 million subordinated debt issuance in May 2015.

The net interest margin decreased slightly for the six months ended June 30, 2016 as six months of interest expense was recognized in 2016 from the subordinated debt issuance as compared to one month in the same period in 2015. Excluding accretable discount, the net interest margin for the quarter and six months ended June 30, 2016 was 3.16% and 3.11%, a decrease of 5 and 17 basis points compared to the same periods in the prior year as new loans, on average, were originated at lower yields over the previous twelve months.

For the quarter and six months, net interest income (tax equivalent) rose to $32.0 million and $61.4 million, or an increase of 32.5% and 28.2%, respectively, as compared to $24.1 million and $47.9 million for the same periods in 2015. The increase in net interest income was primarily the result of an increase of 33.7% and 31.3% in interest earning assets for the quarter and six months, compared to the same periods in 2015, due to a combination of organic growth and acquisitions previously described.

On a linked-quarter basis, the net interest margin increased by 6 basis points, primarily due to higher yields on acquired loans as well as a reduction in rates paid on deposits. Excluding the accretable discount recorded during the quarter, the net interest margin increased by 10 basis points.

Provision for Loan Losses

The provision for loan losses was $3.1 million and $3.6 million for the quarter and six months ended June 30, 2016, respectively, or increases of $3.3 million and $3.7 million as compared to the same periods in 2015. The loan portfolio held for investment experienced organic growth of $98.1 million during the quarter while the trend in historical net charge-offs has been low. Recoveries in the prior year partially offset the provision for loan losses required as a result of portfolio growth.

On a linked-quarter basis, the provision for loan losses increased by $2.6 million, mainly as a result of net charge-offs of specific reserves in the commercial portfolio in the second quarter.

Noninterest Income

Noninterest income was $30.0 million and $54.9 million for the quarter and six months ended June 30, 2016, decreases of $6.7 million and $13.9 million, or 18.3% and 20.2%, as compared to the same periods in 2015, primarily due to a net decrease in mortgage banking activities of $5.3 million and $11.9 million, respectively. Higher than usual non-cash MSR impairment charges were partially offset by increased mortgage production revenue. The remainder of the decrease in noninterest income is primarily attributable to a $1.6 million and $1.4 million decrease in gains in ORE sales included as part of other income for the quarter and six months ended June 30, 2016, respectively, partially offset by an increase in income from SBA lending activities and service charges and fees on loan and deposit accounts as the base of customer accounts has continued to grow organically and through acquisitions.

Mortgage production income increased by $6.0 million and $1.7 million, or 28.9% and 3.9%, for the quarter and six months, respectively, as compared to the same periods in 2015, as all components experienced increases. Mortgage production income consists of marketing gains and origination points and fees. Total mortgage production for the quarter was $815.1 million, an increase of $26.6 million, or 3.4%, as compared to the prior year while production for the six months was approximately $1.4 billion in both years. Production growth during the quarter is the result of seasonal boosts, as well as an increase in loan volume per loan originator.

Mortgage servicing revenue increased by $869,000 and $1.7 million, or 23.1% and 23.2%, for the quarter and six months, respectively, as compared to the same periods in 2015, as the portfolio of mortgage loans serviced for others increased from $5.9 million to $7.2 million year over year.

As noted earlier, higher than usual non-cash MSR impairment charges of $8.6 million and $13.3 million were recorded for the quarter and six months ended June 30, 2016, respectively, an increase of $4.7 million and $13.4 million, as compared to the same periods in 2015.

The volume of interest rate lock commitments issued by the Bank in June for retail mortgage lending hit an all-time high, and issued lock commitments in July remain elevated and above recent trends. The pipeline of loans to be sold at June 30, 2016 is up approximately 7.6% from the same period last year.

On a linked-quarter basis, noninterest income increased by $5.1 million, or 20.4%, primarily due to an increase in income from mortgage banking activities of $4.6 million, which was largely driven by higher mortgage production income and servicing revenue, partially offset by higher than normal MSR impairment charges recorded during the quarter. The remainder of the increase is due to higher income from indirect and SBA lending activities during the quarter.

Mortgage production income and servicing revenue was $31.5 million for the quarter, an increase of $8.8 million, or 38.8%, as compared to the prior quarter. The primary driver of this change was an increase in marketing gains of $7.6 million, or 50.0%, while origination points and fees were $1.1 million, or 36.1%, higher for the quarter. The primary cause of the increase in marketing gains was the increase in loan sales for the quarter of $165.1 million, or 30.1%, primarily due to increased seasonal loan production. Total production was $815.1 million for the quarter, an increase of $244.3 million, or 42.8%, from the prior quarter. Retail production grew by $251.0 million, or 47.9%, and comprised 95.1% of total production, while wholesale production for the quarter decreased by $6.7 million. Partially offsetting the increase in mortgage revenues was an increase of $3.9 million in MSR impairment charges for the quarter.

Noninterest Expense

Noninterest expense was $48.1 million and $94.7 million for the quarter and six months ended June 30, 2016, an increase of $7.0 million and $14.9 million, or 16.9% and 18.7%, as compared to the same periods in 2015. The increase in noninterest expense compared to the prior year is mostly attributable to an increase in expenses associated with organic growth as well as acquisitions. Noncontinuing acquisition costs of approximately $400,000 and $1.5 million were included in noninterest expenses for the quarter and six months, respectively, with nominal acquisition costs for the same periods in 2015.

Salaries and benefits increased by $3.6 million and $8.2 million, or 18.1% and 21.2%, for the quarter and six months ended June 30, 2016, as compared to the same periods in 2015 as the Bank continued its strategy of increasing its footprint across a larger geographic area, through acquisitions and organic growth. Approximately $2 million of the increase occurred due to an increase in the FTE count and annual cost of living adjustments. Also included in the increase in salaries and benefits is a $1.4 million and $2.3 million increase in the quarter and year to date, as compared to the same period in the prior year, of employer taxes and employee benefits, the majority of which resulted from an increase in medical premiums, representing an increase in both number of employees and the increased cost of employer-paid benefits.

Commissions increased by $919,000 and $1.0 million, or 11.8% and 7.1%, for the quarter and six months

ended June 30, 2016 due to increases in mortgage loan production.

The increase in occupancy expense of $559,000 and $1.5 million, or 16.2% and 21.1%, for the quarter and six months ended June 30, 2016, respectively, as compared to the same periods in 2015 was a result of increases in depreciation expense, small equipment purchases, property taxes and utilities expenses, primarily due to increased expenses associated with new branches, both through acquisitions and organic growth.

Other noninterest expense increased by $1.8 million and $4.0 million, or 19.7% and 21.6%, for the quarter and six months ended June 30, 2016 compared to comparable prior year periods, primarily due to increased expenses associated with new branches and acquisitions. Of this increase, professional fees increased by $784,000 and $2.1 million, primarily due to outside services contracted for maintenance and operations and legal fees for mergers and acquisitions.

On a linked-quarter basis, noninterest expense increased by $1.6 million, or 3.4%, primarily due to a $2.5 million, or 39.9% increase in commissions as mortgage loan production increased by $244.3 million, or 42.8%. This increase was partially offset by a reduction of approximately $700,000 in acquisition-related expenses, following the completion of The Bank of Georgia system conversion in late March. Noninterest expense for the second quarter includes approximately $400,000 in noncontinuing acquisition costs as the AEB system conversion is scheduled for completion in late July 2016.

ABOUT FIDELITY SOUTHERN CORPORATION

Fidelity Southern Corporation, through its operating subsidiaries, Fidelity Bank and LionMark Insurance Company, provides banking services and trust and wealth management services and credit-related insurance products through branches in Georgia and Florida, and an insurance office in Atlanta, Georgia. SBA, indirect automobile, and mortgage loans are provided throughout the South. For additional information about Fidelity's products and services, please visit the web site at www.FidelitySouthern.com.

This news release contains forward-looking statements, as defined by Federal Securities Laws, including statements about financial outlook and business environment. These statements are provided to assist in the understanding of future financial performance and such performance involves risks and uncertainties that may cause actual results to differ materially from those in such statements. Any such statements are based on current expectations and involve a number of risks and uncertainties. For a discussion of factors that may cause such forward-looking statements to differ materially from actual results, please refer to the section entitled “Forward Looking Statements” from Fidelity Southern Corporation’s 2015 Annual Report filed on Form 10-K with the Securities and Exchange Commission. Additional information and other factors that could affect future financial results are included in Fidelity's filings with the Securities and Exchange Commission.

-end-

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

FINANCIAL HIGHLIGHTS

(UNAUDITED)



	As of or for the Quarter Ended									As of or for the Six Months Ended
($ in thousands, except per share data)	June 30, 2016			March 31, 2016			June 30, 2015			June 30, 2016			June 30, 2015
INCOME STATEMENT DATA:
Interest income	$	36,806		$	34,292		$	27,516		$	71,098		$	54,002
Interest expense	4,963			4,998			3,502			9,961			6,447
Net interest income	31,843			29,294			24,014			61,137			47,555
Provision for loan losses	3,128			500			(182		)	3,628			(74		)
Noninterest income	29,971			24,886			36,695			54,857			68,733
Noninterest expense	48,125			46,558			41,165			94,683			79,800
Net income	6,645			4,541			12,451			11,186			23,141
PERFORMANCE:
Earnings per common share - basic	$	0.26		$	0.19		$	0.58		$	0.45		$	1.08
Earnings per common share - diluted	$	0.26		$	0.18		$	0.52		$	0.44		$	1.00
Total revenues	$	66,777		$	59,178		$	64,211		$	125,955		$	122,735
Book value per common share	$	13.17		$	12.96		$	12.90		$	13.17		$	12.90
Tangible book value per common share	$	12.60		$	12.40		$	12.70		$	12.60		$	12.70
Cash dividends paid per common share	$	0.12		$	0.12		$	0.10		$	0.24		$	0.19
Return on average assets	0.64		%	0.46		%	1.23		%	0.55		%	1.48		%
Return on average shareholders' equity	8.07		%	5.90		%	17.97		%	7.03		%	17.11		%
Net interest margin	3.31		%	3.25		%	3.25		%	3.29		%	3.31		%
END OF PERIOD BALANCE SHEET SUMMARY:
Total assets	4,281,927			4,101,499			3,374,938			4,281,927			3,374,938
Earning assets	3,860,181			3,683,411			3,118,065			3,860,181			3,118,065
Loans, excluding Loans Held-for-Sale	3,190,707			3,092,632			2,411,143			3,190,707			2,411,143
Total loans	3,649,736			3,489,511			2,885,410			3,649,736			2,885,410
Total deposits	3,569,606			3,421,448			2,639,248			3,569,606			2,639,248
Shareholders' equity	335,870			329,778			285,946			335,870			285,946
Assets serviced for others	8,699,107			8,336,541			7,292,561			8,699,107			7,292,561
DAILY AVERAGE BALANCE SHEET SUMMARY:
Total assets	4,207,182			3,942,683			4,076,581			4,076,581			3,163,834
Earning assets	3,804,751			3,639,236			2,980,741			3,694,547			2,920,121
Loans, excluding Loans Held-for-Sale	3,161,676			3,023,312			2,361,146			3,067,279			2,330,140
Total loans	3,590,929			3,370,645			2,778,117			3,482,436			2,717,672
Total deposits	3,470,966			3,212,691			2,624,412			3,344,868			2,577,958
Shareholders' equity	331,056			308,952			277,961			320,004			272,790
Assets serviced for others	8,480,382			8,162,343			7,104,630			8,321,362			6,924,423
ASSET QUALITY RATIOS:
Net charge-offs/(recoveries), annualized to average loans	0.25		%	(0.20		)%	(0.03		)%	0.12		%	0.13		%
Allowance to period-end loans	0.88		%	0.86		%	0.97		%	0.88		%	0.97		%
Nonperforming assets to total loans, ORE and repossessions	1.73		%	2.03		%	2.01		%	1.73		%	2.01		%
Allowance to nonperforming loans, ORE and repossessions	0.51x			0.42x			0.48x			0.51x			0.48x
SELECTED RATIOS:
Loans to total deposits	89.39		%	90.39		%	91.36		%	89.39		%	91.36		%
Average total loans to average earning assets	94.38		%	92.62		%	93.20		%	94.26		%	93.07		%
Noninterest income to total revenue	44.88		%	42.05		%	57.15		%	43.55		%	56.00		%
Leverage ratio	8.46		%	8.88		%	9.77		%	8.46		%	9.77		%
Common equity tier 1 capital	8.18		%	8.25		%	8.96		%	8.18		%	8.96		%
Tier 1 risk-based capital	9.35		%	9.47		%	10.46		%	9.35		%	10.46		%
Total risk-based capital	12.06		%	12.21		%	13.71		%	12.06		%	13.71		%

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



($ in thousands)	June 30, 2016			March 31, 2016			June 30, 2015
ASSETS
Cash and cash equivalents	$	148,745		$	125,289		$	80,716
Investment securities available-for-sale	168,938			167,574			140,878
Investment securities held-to-maturity	17,224			15,248			11,484
Loans held-for-sale	459,029			396,879			474,267
Loans	3,190,707			3,092,632			2,411,143
Allowance for loan losses	(28,037		)	(26,726		)	(23,425		)
Loans, net of allowance for loan losses	3,162,670			3,065,906			2,387,718
Premises and equipment, net	86,515			87,993			65,485
Other real estate, net	18,621			19,482			16,070
Bank owned life insurance	67,025			66,536			65,511
Servicing rights, net	78,820			82,879			77,614
Other assets	74,340			73,713			55,195
Total assets	$	4,281,927		$	4,101,499		$	3,374,938

LIABILITIES
Deposits
Noninterest-bearing demand deposits	$	995,673		$	885,319		$	646,340
Interest-bearing deposits
Demand and money market	1,154,024			1,130,050			850,314
Savings	368,333			355,858			299,905
Time deposits	1,051,576			1,050,221			842,689
Total deposits	3,569,606			3,421,448			2,639,248
Short-term borrowings	215,833			189,278			303,521
Subordinated debt, net	120,388			120,355			120,277
Other liabilities	40,230			40,640			25,946
Total liabilities	3,946,057			3,771,721			3,088,992

SHAREHOLDERS' EQUITY
Preferred stock	—			—			—
Common stock	196,913			195,200			164,835
Accumulated other comprehensive income, net	3,364			2,841			2,472
Retained earnings	135,593			131,737			118,639
Total shareholders’ equity	335,870			329,778			285,946
Total liabilities and shareholders’ equity	$	4,281,927		$	4,101,499		$	3,374,938

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)



	For the Quarter Ended							For the Six Months Ended
($ in thousands, except per share data)	June 30, 2016		March 31, 2016		June 30, 2015			June 30, 2016		June 30, 2015
INTEREST INCOME
Loans, including fees	$	35,244	$	32,945	$	26,382		$	68,189	$	51,671
Investment securities	1,444		1,280		1,120			2,724		2,305
Federal funds sold and bank deposits	118		67		14			185		26
Total interest income	36,806		34,292		27,516			71,098		54,002
INTEREST EXPENSE
Deposits	3,211		3,265		2,683			6,476		5,175
Other borrowings	311		294		161			605		338
Subordinated debt	1,441		1,439		658			2,880		934
Total interest expense	4,963		4,998		3,502			9,961		6,447
Net interest income	31,843		29,294		24,014			61,137		47,555
Provision for loan losses	3,128		500		(182		)	3,628		(74		)
Net interest income after provision for loan losses	28,715		28,794		24,196			57,509		47,629
NONINTEREST INCOME
Service charges on deposit accounts	1,433		1,370		1,195			2,803		2,278
Other fees and charges	1,858		1,666		1,274			3,524		2,440
Mortgage banking activities	19,287		14,735		24,617			34,022		45,935
Indirect lending activities	4,782		4,264		5,031			9,046		11,010
SBA lending activities	1,893		1,234		1,364			3,127		2,295
Bank owned life insurance	494		454		500			948		992
Securities gains	200		82		—			282		—
Other	24		1,081		2,714			1,105		3,783
Total noninterest income	29,971		24,886		36,695			54,857		68,733
NONINTEREST EXPENSE
Salaries and employee benefits	23,229		23,423		19,668			46,652		38,490
Commissions	8,713		6,230		7,794			14,943		13,954
Occupancy, net	4,013		4,384		3,454			8,397		6,936
Communication	1,217		1,128		1,102			2,345		2,050
Other	10,953		11,393		9,147			22,346		18,370
Total noninterest expense	48,125		46,558		41,165			94,683		79,800
Income before income tax expense	10,561		7,122		19,726			17,683		36,562
Income tax expense	3,916		2,581		7,275			6,497		13,421
NET INCOME	$	6,645	$	4,541	$	12,451		$	11,186	$	23,141

EARNINGS PER COMMON SHARE:
Basic	$	0.26	$	0.19	$	0.58		$	0.45	$	1.08
Diluted	$	0.26	$	0.18	$	0.52		$	0.44	$	1.00
Weighted average common shares outstanding-basic	25,481		24,273		21,456			24,877		21,418
Weighted average common shares outstanding-diluted	25,961		24,841		23,756			25,401		23,034

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

LOANS BY CATEGORY

(UNAUDITED)



($ in thousands)	June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015		June 30, 2015
Commercial	$	797,146	$	797,101	$	703,292	$	579,319	$	533,853
SBA	144,223		137,220		135,993		138,078		138,819
Total commercial and SBA loans	941,369		934,321		839,285		717,397		672,672
Construction loans	217,544		200,082		177,033		154,335		146,778
Indirect automobile	1,512,406		1,463,005		1,449,480		1,399,932		1,281,978
Installment	46,556		38,543		14,055		12,236		11,698
Total consumer loans	1,558,962		1,501,548		1,463,535		1,412,168		1,293,676
Residential mortgage	336,760		321,835		302,378		248,697		210,740
Home equity lines of credit	136,072		134,846		114,717		109,217		87,277
Total mortgage loans	472,832		456,681		417,095		357,914		298,017
Loans	3,190,707		3,092,632		2,896,948		2,641,814		2,411,143

Loans held-for-sale:
Residential mortgage	299,616		232,794		233,525		218,308		310,793
SBA	9,413		14,085		14,309		11,343		13,474
Indirect automobile	150,000		150,000		150,000		110,000		150,000
Total loans held-for-sale	459,029		396,879		397,834		339,651		474,267
Total loans	$	3,649,736	$	3,489,509	$	3,294,782	$	2,981,465	$	2,885,410

Noncovered loans	$	3,171,138	$	3,071,451	$	2,874,308	$	2,617,991	$	2,385,489
Covered loans	19,569		21,179		22,640		23,823		25,654
Loans held-for-sale	459,029		396,879		397,834		339,651		474,267
Total loans	$	3,649,736	$	3,489,509	$	3,294,782	$	2,981,465	$	2,885,410

DEPOSITS BY CATEGORY

(UNAUDITED)



	For the Three Months Ended
	June 30, 2016				March 31, 2016				December 31, 2015				September 30, 2015				June 30, 2015
($ in thousands)	Average Amount		Rate		Average Amount		Rate		Average Amount		Rate		Average Amount		Rate		Average Amount		Rate
Noninterest-bearing demand deposits	$	932,448	—	%	$	786,993	—	%	$	761,507	—	%	$	676,976	—	%	$	650,467	—	%
Interest-bearing demand deposits	1,129,179		0.26	%	1,051,221		0.27	%	1,020,241		0.26	%	881,456		0.25	%	843,226		0.24	%
Savings deposits	355,801		0.32	%	358,481		0.34	%	369,536		0.35	%	308,503		0.34	%	301,599		0.33	%
Time deposits	1,053,538		0.84	%	1,015,996		0.90	%	994,805		0.92	%	864,472		0.94	%	829,120		0.94	%
Total average deposits	$	3,470,966	0.37	%	$	3,212,691	0.41	%	$	3,146,089	0.42	%	$	2,731,407	0.42	%	$	2,624,412	0.41	%

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

NONPERFORMING AND CLASSIFIED ASSETS

(UNAUDITED)



($ in thousands)	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
NONPERFORMING ASSETS
Nonaccrual loans	$	28,153		$	29,611		$	27,128		$	29,374		$	30,756
Loans past due 90 days or more and still accruing	—			1,671			1,284			3,968			836
Repossessions	1,067			1,751			1,561			1,435			1,041
Other real estate (ORE)	18,621			19,482			18,677			14,707			16,070
Nonperforming assets	$	47,841		$	52,515		$	48,650		$	49,484		$	48,703
NONPERFORMING ASSET RATIOS
Loans 30-89 days past due	$	6,705		$	8,180		$	9,353		$	7,018		$	3,653
Loans 30-89 days past due to loans	0.21		%	0.26		%	0.32		%	0.27		%	0.15		%
Loans past due 90 days or more and still accruing to loans	—		%	0.05		%	0.04		%	0.15		%	0.03		%
Nonperforming assets to loans, ORE, and repossessions	1.49		%	1.69		%	1.67		%	1.86		%	2.01		%

ASSET QUALITY RATIOS
Classified Asset Ratio ⁽³⁾	26.34		%	26.27		%	28.38		%	17.56		%	18.59		%
Nonperforming loans as a % of loans	0.88		%	1.01		%	0.98		%	1.26		%	1.31		%
ALL to nonperforming loans	99.59		%	85.44		%	74.32		%	74.23		%	74.15		%
Net charge-offs/(recoveries), annualized to average loans	0.25		%	(0.02		)%	0.18		%	0.05		%	(0.03		)%
ALL as a % of loans	0.88		%	0.86		%	0.91		%	0.94		%	0.97		%
ALL as a % of loans excluding acquired loans⁽⁴⁾	0.97		%	0.96		%	0.96		%	0.95		%	0.98		%

CLASSIFIED ASSETS
Classified loans ⁽¹⁾	$	78,516		$	81,444		$	84,093		$	47,906		$	49,561
ORE and repossessions	$	16,396		$	17,009		$	17,125		$	12,750		$	13,209
Total classified assets ⁽²⁾	$	94,912		$	98,453		$	101,218		$	60,656		$	62,770

⁽¹⁾ Amount of SBA guarantee included	$	5,007		$	5,226		$	4,680		$	3,970		$	5,256
⁽²⁾Classified assets include loans having a risk rating of substandard or worse, both accrual and nonaccrual, repossessions and ORE, net of loss share
⁽³⁾ Classified asset ratio is defined as classified assets as a percentage of the sum of Tier 1 capital plus allowance for loan losses
⁽⁴⁾ Allowance calculation excludes acquired loans, due to valuation calculated at acquisition



FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
ANALYSIS OF INDIRECT LENDING
(UNAUDITED)

			As of or for the Quarter Ended
($ in thousands)			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
Average loans outstanding ⁽¹⁾			$	1,642,829		$	1,419,389		$	1,563,498		$	1,486,077		$	1,407,848
Loans serviced for others			$	1,219,909		$	1,171,453		$	1,117,210		$	1,117,721		$	1,091,644
Past due loans:
	Amount 30+ days past due		$	1,588		$	1,087		$	1,829		$	1,381		$	1,098
	Number 30+ days past due		172			159			235			170			128
30+ day performing delinquency rate ⁽²⁾			0.10		%	0.07		%	0.11		%	0.10		%	0.08		%
Nonperforming loans			$	887		$	797		$	1,117		$	810		$	527
Nonperforming loans as a percentage of period end loans ⁽²⁾			0.05		%	0.05		%	0.07		%	0.06		%	0.04		%
Net charge-offs			$	751		$	797		$	1,014		$	605		$	495
Net charge-off rate ⁽³⁾			0.20		%	0.22		%	0.28		%	0.17		%	0.16		%
Number of vehicles repossessed during the period			120			127			131			120			106
Average beacon score			756			756			757			755			755
Production by state:
	Alabama		$	21,820		$	19,971		$	17,758		$	20,886		$	18,831
	Arkansas		44,548			34,340			39,436			46,704			39,174
	North Carolina		25,159			19,660			20,378			21,484			20,536
	South Carolina		17,031			16,471			13,661			13,339			16,021
	Florida		77,108			81,638			95,054			98,087			91,725
	Georgia		51,253			47,141			48,241			54,497			52,735
	Mississippi		28,414			27,233			27,032			23,424			21,281
	Tennessee		21,683			17,529			18,156			16,946			19,295
	Virginia		12,546			11,580			12,640			14,829			16,349
	Texas		32,522			35,445			36,127			37,673			35,739
	Louisiana		60,557			38,430			27,147			24,490			24,095
	Oklahoma ⁽⁴⁾		1,238			1,796			82			—			—
		Total production by state	$	393,879		$	351,234		$	355,712		$	372,359		$	355,781
Loan sales			$	175,991		$	171,834		$	111,683		$	142,132		$	177,820
Portfolio yield ⁽¹⁾			2.70		%	2.72		%	2.79		%	2.75		%	2.79		%


⁽¹⁾	Includes held-for-sale
⁽²⁾	Calculated by dividing loan category as of the end of the period by period-end loans including held for sale for the specified loan portfolio
⁽³⁾	Calculated by dividing annualized net charge-offs for the period by average loans held for investment during the period for the specified loan category
⁽⁴⁾	Expanded into Oklahoma in November 2015



FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
INCOME FROM MORTGAGE BANKING ACTIVITIES
(UNAUDITED)

			As of or for the Quarter Ended
(in thousands)			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
Marketing gain, net			$	22,734		$	15,162		$	15,407		$	17,573		$	17,099
Origination points and fees			4,101			3,014			2,914			3,871			3,726
Loan servicing revenue			4,631			4,492			4,377			4,059			3,762
Gross mortgage revenue			$	31,466		$	22,668		$	22,698		$	25,503		$	24,587
Less:
MSR amortization			(3,610		)	(3,272		)	(2,893		)	(2,489		)	(2,581		)
MSR impairment, net			(8,569		)	(4,661		)	(999		)	(2,215		)	2,611
Total income from mortgage banking activities			$	19,287		$	14,735		$	18,806		$	20,799		$	24,617

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
ANALYSIS OF MORTGAGE LENDING
(UNAUDITED)

			As of or for the Quarter Ended
($ in thousands)			June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
Funded loan type (UPB):
		Conventional	65.9		%	66.1		%	60.5		%	60.2		%	61.8		%
		FHA/VA/USDA	23.3		%	21.7		%	23.4		%	27.5		%	23.7		%
		Jumbo	10.8		%	12.2		%	16.1		%	12.3		%	14.5		%

Portfolio Production:			$	47,847		$	36,462		$	36,520		$	43,295		$	48,887
		Portfolio Product %	5.9		%	6.4		%	6.4		%	6.2		%	6.2		%

		Wholesale %	4.9		%	8.2		%	9.0		%	9.4		%	8.9		%

% for purchases			76.8		%	71.5		%	77.5		%	81.4		%	74.0		%
% for refinance loans			23.2		%	28.5		%	22.5		%	18.6		%	26.0		%

Production by region:
	Georgia		$	526,446		$	341,074		$	341,115		$	424,554		$	468,795
	Florida/Alabama		54,231			42,412			44,873			53,815			58,607
	Virginia/Maryland		160,644			112,769			109,685			147,387			182,850
	North and South Carolina		33,497			27,567			20,973			11,398			8,002
	Total retail		774,818			523,822			516,646			637,154			718,254
	Wholesale		40,233			46,905			51,224			66,490			70,169
	Total production by region		$	815,051		$	570,727		$	567,870		$	703,644		$	788,423

Gross pipeline of locked loans to be sold (UPB)			$	387,777		$	370,497		$	226,485		$	299,996		$	360,276
Loans held for sale (UPB)			$	288,734		$	226,327		$	228,586		$	213,798		$	308,947

Total loan sales (UPB)			$	712,712		$	547,614		$	520,742		$	744,621		$	665,738
		Conventional	70.5		%	66.7		%	63.7		%	63.1		%	63.9		%
		FHA/VA/USDA	23.0		%	21.4		%	27.0		%	29.1		%	24.8		%
		Jumbo	6.5		%	11.9		%	9.3		%	7.8		%	11.3		%

Average loans outstanding ⁽¹⁾			$	598,403		$	495,209		$	450,263		$	511,317		$	449,097

⁽¹⁾ Includes held-for-sale



FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES
THIRD PARTY MORTGAGE LOAN SERVICING
(UNAUDITED)

	As of or for the Quarter Ended
($ in thousands)	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015			June 30, 2015
Loans serviced for others (UPB)	$	7,200,540		$	6,894,083		$	6,652,700		$	6,393,874		$	5,942,063
Average loans serviced for others (UPB)	$	7,022,718		$	6,781,135		$	6,535,608		$	6,160,182		$	5,774,793

MSR book value, net of amortization	87,652			84,111			82,290			79,891			73,430
MSR impairment	(22,753		)	(14,184		)	(9,524		)	(8,525		)	(6,310		)
MSR net carrying value	64,899			69,927			72,766			71,366			67,120
MSR carrying value as a % of period end UPB	0.9		%	1.0		%	1.1		%	1.1		%	1.1		%

Delinquency % loans serviced for others	0.6		%	0.5		%	0.6		%	0.4		%	0.4		%

MSR revenue multiple ⁽¹⁾	3.42			3.83			4.08			4.23			4.33

⁽¹⁾ MSR carrying value (period end) to period end loans serviced for others divided by the ratio of annualized mortgage loan servicing revenue to average mortgage loans serviced for others

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

AVERAGE BALANCE, INTEREST AND YIELDS

(UNAUDITED)



	For the Quarter Ended
	June 30, 2016							June 30, 2015
	Average			Income/		Yield/		Average			Income/		Yield/
($ in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets
Interest-earning assets:
Loans, net of unearned income ⁽¹⁾	$	3,590,929		$	35,304	3.95	%	$	2,778,117		$	26,438	3.82	%
Investment securities ⁽¹⁾	190,184			1,502		3.18	%	159,734			1,174		2.95	%
Federal funds sold and bank deposits	99,037			118		0.48	%	42,890			14		0.13	%
Total interest-earning assets	3,880,150			36,924		3.83	%	2,980,741			27,626		3.72	%
Noninterest-earning assets:
Cash and due from banks	29,956							14,577
Allowance for loan losses	(26,674		)					(23,774		)
Premises and equipment, net	88,070							61,821
Other real estate	19,481							18,342
Other assets	216,188							176,748
Total assets	$	4,207,171						$	3,228,455
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Demand deposits	$	1,129,179		$	723	0.26	%	$	843,226		$	495	0.24	%
Savings deposits	355,801			283		0.32	%	301,599			247		0.33	%
Time deposits	1,053,538			2,205		0.84	%	829,120			1,941		0.94	%
Total interest-bearing deposits	2,538,518			3,211		0.51	%	1,973,945			2,683		0.55	%
Short-term borrowings	244,944			311		0.51	%	224,429			161		0.29	%
Subordinated debt	120,372			1,441		4.81	%	73,179			658		3.61	%
Total interest-bearing liabilities	2,903,834			4,963		0.69	%	2,271,553			3,502		0.62	%
Noninterest-bearing liabilities and shareholders' equity:
Demand deposits	932,448							650,467
Other liabilities	39,833							28,474
Shareholders’ equity	331,056							277,961
Total liabilities and shareholders’ equity	$	4,207,171						$	3,228,455
Net interest income/spread				$	31,961	3.14	%				$	24,124	3.10	%
Net interest margin						3.31	%						3.25	%

⁽¹⁾ Interest income includes the effect of taxable-equivalent adjustment using a 35% tax rate.

FIDELITY SOUTHERN CORPORATION AND SUBSIDIARIES

AVERAGE BALANCE, INTEREST AND YIELDS

(UNAUDITED)



	For the Six Months Ended
	June 30, 2016							June 30, 2015
	Average			Income/		Yield/		Average			Income/		Yield/
($ in thousands)	Balance			Expense		Rate		Balance			Expense		Rate
Assets
Interest-earning assets:
Loans, net of unearned income ⁽¹⁾	$	3,482,435		$	68,309	3.94	%	$	2,717,672		$	51,871	3.85	%
Investment securities ⁽¹⁾	187,921			2,835		3.03	%	162,082			2,420		3.01	%
Federal funds sold and bank deposits	84,800			185		0.44	%	40,367			26		0.13	%
Total interest-earning assets	3,755,156			71,329		3.82	%	2,920,121			54,317		3.75	%
Noninterest-earning assets:
Cash and due from banks	29,243							14,942
Allowance for loan losses	(26,863		)					(24,512		)
Premises and equipment, net	85,315							61,402
Other real estate	19,688							20,270
Other assets	214,036							171,361
Total assets	$	4,076,575						$	3,163,584
Liabilities and shareholders’ equity
Interest-bearing liabilities:
Demand deposits	$	1,090,730		$	1,417	0.26	%	$	828,113		$	947	0.23	%
Savings deposits	357,972			588		0.33	%	305,475			502		0.33	%
Time deposits	1,035,611			4,471		0.87	%	816,132			3,726		0.92	%
Total interest-bearing deposits	2,484,313			6,476		0.52	%	1,949,720			5,175		0.54	%
Short-term borrowings	248,152			605		0.49	%	226,888			338		0.30	%
Subordinated debt	120,355			2,880		4.81	%	59,817			934		3.15	%
Total interest-bearing liabilities	2,852,820			9,961		0.70	%	2,236,425			6,447		0.58	%
Noninterest-bearing liabilities and shareholders' equity:
Demand deposits	860,555							628,238
Other liabilities	43,196							26,131
Shareholders’ equity	320,004							272,790
Total liabilities and shareholders’ equity	$	4,076,575						$	3,163,584
Net interest income/spread				$	61,368	3.12	%				$	47,870	3.17	%
Net interest margin						3.29	%						3.31	%

⁽¹⁾ Interest income includes the effect of taxable-equivalent adjustment using a 35% tax rate.

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